Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Bank of England on heightened alert for further banking turmoil

Bank of England on heightened alert for further banking turmoil

The Bank of England is on "heightened" alert for further turmoil in the banking sector, its governor has said.
However, Andrew Bailey told MPs the recent problems facing lenders had not caused stress in the UK banking system.

Officials have tried to calm investors since Silicon Valley Bank and Signature Bank failed, sparking concerns about the stability of other lenders.

In Europe, worries over the strength of Swiss banking giant Credit Suisse led to a rushed takeover by rival UBS.

Nerves among investors have sparked sharp falls in banking shares around the world.

Mr Bailey told MPs on the Treasury Committee that the Bank of England would "go on being vigilant".

He said we were in a period of "very heightened, frankly, tension and alertness".

The collapse of Silicon Valley Bank (SVB) was the biggest US banking failure since the 2008 financial crisis, and left depositors struggling to get their money out.

The collapse was linked to recent rises in interest rates which had hit the value of SVB's assets.

US regulators had to step in to protect customers, while the lender's UK arm was rescued by HSBC.

The episode has generated heated debate in the US about whether SVB was subject to appropriate supervision and if officials responded properly to its collapse.

At a hearing in Washington on Tuesday, financial regulators called the failure "a textbook case of mismanagement," casting blame on SVB leaders for failing to adjust strategies as interest rates rose last year, despite warnings from officials.

But they faced questions from senators who said the episode had also revealed failures in oversight.

"It looks like regulators knew the problem but nobody dropped the hammer," said Senator Jon Tester, a Democrat from Montana.

UK banking officials admitted to MPs that the speed of the SVB's collapse had taken them by surprise and may mean that banking rules may need updating.

Mr Bailey said it was "the fastest collapse from health to death" since the UK's Barings Bank failed in 1995 after suffering heavy losses resulting from fraudulent investments.

Sam Woods, the chief executive of the Prudential Regulation Authority, noted that SVB UK saw about a third of its deposits - £3bn - withdrawn on one day.

He twice suggested to the MPs that the stress tests applied to UK banks to make sure they can withstand a crisis would need to be looked at, given how new technology meant deposits could be withdrawn electronically in seconds.

However, Mr Bailey told MPs he did not think the UK was in a position similar to the 2008 global financial crisis, when banks stopped lending to each other, plunging the world into a deep recession.

He added that while rising interest rates were "an issue" for US banks, they were less likely to affect UK lenders because they were regulated differently.

In the US the head of the Federal Deposit Insurance Corp, Michael Gruenberg, said the SVB saga had shown the increased risk of bank runs at at a time when "money can flow out of institutions with incredible speed in response to news amplified through social media channels".

He and other regulators in the US expressed support for strengthening banking rules, changes which some politicians such as Elizabeth Warren have championed.

But stricter regulation is opposed by Republicans - reducing the chance of it happening.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
×